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The euro fell against most of its major peers as Spain’s bailout spurred concern that the sovereign-debt crisis is deepening as it spreads among indebted nations before Greek elections June 17.
The 17-nation currency earlier rose, touching a two-week high, after Spain asked for as much as 100 billion euros ($126 billion) to save its banking system, making it the fourth member of the currency bloc to seek a rescue. The bailout helped move Italy to the front lines of the crisis, as bets increased Europe’s third largest economy may be the next one to succumb.
Seven months after winning a landslide victory, Spanish Prime Minister Mariano Rajoy was forced to abandon his bid to recapitalize banks without external help. The bailout loan will be channeled through the state’s bank-rescue fund, known as FROB, and extended to lenders that need it, Economy Minister Luis de Guindos Jurado said in Madrid on June 9.
Spanish and Italian 10-year bonds fell for a fourth day, reversing earlier gains. The Spanish yield rose 31 basis points to 6.52 percent, while the rate on the Italian securities climbed 27 basis points to 6.04 percent.
Italy’s economy, the third-biggest in the region, shrank 0.8 percent in the first three months of this year from the fourth quarter, Istat, the Rome-based national statistics institute said, confirming an initial estimate. Household spending decreased 1 percent and exports fell 0.6 percent.
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